Has the recession taught the kids to pinch pennies? As the Wall Street Journal reports, millennials who have watched their parents lose their homes and blow through meager savings are beginning to take steps to ensure that the same thing doesn’t happen to them. Younger Americans are now putting money away and enrolling in retirement plans at a much higher rate than 10 years ago, while also cutting back on their debt:
Of employees under age 25, 44% participated in their companies’ 401(k) retirement plans in 2011, up from just 27% in 2003, according to data on millions of employees whose companies’ retirement plans are managed by Vanguard Group Inc. Of those ages 25 to 34, 63% participated in 2011, up from 58% in 2003.While they still face serious student debts, young people also have cut back on credit-card debt. About 45% of Americans under 35 had credit-card debt in 2010, compared with 63% in 2002, according to survey data from Strategic Business Insight’s MacroMonitor. The average credit-card balance for those under age 35 fell to $4,100 from $5,100 over that period, adjusted for inflation. The under-35 group was the only age group that saw average credit-card balances fall.
Hopefully this trend will continue well after the economy emerges from the current rut. America’s savings rate had long been dangerously low, and now the boomers are heading into their retirement years with high debt and low savings. And at a time when many pensions and government entitlement programs seem unsustainable, putting money away is smarter than ever.Via Meadia would like to add one more piece of advice, though. As you are saving for the future, remember what somebody said 2000 years ago in Palestine and make sure your portfolio is properly diversified to minimize risk: “Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt and thieves break through and steal: But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal. For where your treasure is, there will your heart be also.” (Matthew 6:19-21)Good advice then, and still smart today.